"A new suite of transparency and accountability tools is on the cusp of revolutionizing sustainability across entire agriculture commodity sectors. Empowered by these tools, companies, financial institutions, and governments may turn the tide in the fight to protect tropical forests."
I wish that preventing tropical forest loss was a no brainer, and that we could count on an easy fix, a silver bullet. Take, for instance, the multiple benefits forests provide to society. They capture and store enormous amounts of carbon in trees and soils while they grow. They enhance rainfall and cool the local climate by pumping moisture back into the atmosphere. They are home to an amazing diversity of species whose benefits are yet to be discovered. Still, 3.8 million hectares of the world's tropical forests – an area larger than the state of Maryland – were lost last year. Razing forests is the second-largest source of greenhouse gas emissions, only behind fossil fuels. To make matters worse, their destruction has the potential to spread emerging infectious diseases, which presents far-reaching consequences for humans.
Alleviating the problem is no easy task. On the contrary, it can be puzzling, costly, and complex. Agricultural products, responsible for up to eighty percent of tropical forest loss (primary tropical forest loss amounted to 3.8 million hectares in 2019), flow through a complex web of global supply chains that connect producers scattered across the planet. Imagine what it would take to persuade millions of farmers and hundreds of companies to adopt sustainability standards in production and trade, across different countries and continents. Such a collective change in behavior would require massive shifts in global markets – shifts that transform financial systems, sectoral norms, and, ultimately, policies that govern trade and production. For that reason, most – if not all – the nearly 500 companies who previously committed to remove deforestation from their commodity supply chains, and the 57 governments who had pledged to cut deforestation rates in half by 2020, have yet to fulfill their promises.
However, a suite of recently launched transparency and accountability tools are turning the tide in the fight to protect tropical forests. Alongside the Norwegian International Climate and Forest Initiative and other partners, we have supported three groundbreaking projects: The Accountability Framework Initiative, the Trase Initiative, and the Global Forest Watch Pro Platform. These efforts are empowering and enhancing the ability of commodity companies, financial institutions, governments, and civil society organizations to collaborate, prioritize action, and track and report progress on mitigating the wicked problem of commodity-driven deforestation, closing a much-needed accountability loop.
Accountability Framework Initiative (AFi)
In 2010, the Consumers Goods Forum, a CEO-level organization of 400 global consumer goods manufacturers and retailers with combined revenue of USD 2.8 trillion, including the likes of Unilever, Walmart, and Carrefour, pledged to delink their members' operations from deforestation by 2020. Their tremendous market influence represented a clear signal to suppliers from all over the world that in order to keep market access, they would have to adjust production practices to conform with new market norms.
Enlightened Consumer Goods Forum members quickly began buying an increased proportion of their supplies from certified farms. By that time, certification schemes were the primary tool used by companies to address commodity sustainability. But certification schemes struggled to scale. They accounted for only a part of corporate supplies in most cases and a fraction of any commodity sector. More importantly, corporate systems or practices had not changed to improve the sustainability of their entire supply chains. As such, companies continued to buy substantial amounts of products of unverified origin. And commodity-driven deforestation continued unabated.
The pressure escalated for companies to delink their entire operations from deforestation. Targeted advocacy campaigns proliferated, blaming and shaming companies for their timid progress and lack of transparency. Meanwhile, environmental groups who took a more collaborative stance used their close partnerships with those companies to offer their "best" advice. But aside from certification schemes, there was no agreed guidance or norms to orient that process. That guidance was especially necessary for buyers with global procurement strategies who bought multiple commodities, and for producers and traders that served multiple global buyers. Imagine the headache of navigating inconsistent advice from various environmental groups, while facing the risk of not pleasing any of them and being lauded and criticized, simultaneously, for your actions. To make things even worse, some companies conveniently used that market noise as an excuse for inaction, slowing down much-needed progress.
In 2016, the Rainforest Alliance convened a group of influential environmental groups and professional facilitators who agreed to address that gap. Over two years, they engaged hundreds of stakeholders from all over the world, seeking input, best practices, and emerging innovations. By June 2019, the Accountability Framework emerged as a single umbrella framework with global applications. It represents the agreed set of norms and guidelines that reflect the collective insights obtained through the multi-stakeholder process. With the framework, companies, financial institutions, and governments have a robust reference from where to base the design of their commitments, policies, implementation plans, and, even more importantly, to define how they will monitor, document, and report publicly on progress in a credible way.
Project partners are now using their collective influence to encourage the adoption of the framework by a critical mass of actors globally, turning it into the new norm. They are working closely with market leaders, reporting and accountability platforms, and demand-side and commodity-producing country governments. And it has already been put into use. Civil society groups like the World Wildlife Fund and Ceres have used the framework in their corporate and financial sector engagements. Companies like McDonalds, Cargill, and Mars refer to the importance of the Accountability Framework in their refreshed policies. Service providers are using the framework in their engagements with many more companies.
The project also has second-order effects. While it had not been set up to influence government policy, its members are contributing to the implementation of the Marrakesh Declaration in West and Central African countries such as Liberia, Ghana, and Cameroon. The French government, meanwhile, has referenced the Accountability Framework in their National Strategy to Combat Imported Deforestation. But the development that may hold the most promise has happened just recently. Members of the European Parliament released a comprehensive proposal for due diligence regulations dealing with embodied deforestation. It explicitly incorporates the Accountability Framework definitions. If approved, it would apply to the imports of all companies operating in the European Union, having ripple effects across the globe.
Back in the early 2010s, links between market actors and importing countries with deforestation were extremely opaque. Efforts to make these links more visible were either too granular or ad hoc and piecemeal. They provided limited insights into corporate decision-making while leaving most actors under the radar. Without that visibility, genuine actors faced enormous challenges in delinking their operations, imports, and investments from deforestation; and civil society groups could not effectively hold actors accountable.
Take, for instance, the basic due diligence process that companies had in place to mitigate deforestation and greenhouse gas emissions risks. Because of lack of data, they relied on highly aggregated statistics for a sector within a country of interest. They assumed that a company's share of that risk was proportional to how much product they had bought. But that approach did not consider the spatial distribution of risk. For example, companies purchasing products from a deforestation hotspot within a country would have a much higher footprint – and stronger need of proactive mitigation measures – than those buying from regions where deforestation had been mostly under control. Consequently, these ballpark statistics did not empower buyers to engage suppliers to improve the practices of bad performers, nor helped buyers find – and reward – alternative suppliers with good sustainability performance.
We can also look at it from the lens of an advocacy group. In trying to hold market actors accountable for the deforestation embodied in the products they sold, advocacy groups published time-consuming and costly exposés to prove those ties. Some of the underlying investigations involved personal risks and interpretative mistakes. For example, publicizing the exposure of a commodity exporter to deforestation in one country could taint an entire local industry. There was no way of separating the wheat from the chaff without access to comprehensive footprint data. On some occasions, companies threatened to sue these groups for reputational damage. In any case, while somewhat effective in spurring action by those companies, those exposés were ad hoc and aimed at businesses with significant brand value. They happened to be the ones who often did the most to mitigate those risks. In the meantime, laggard companies remained safe from public scrutiny.
In 2016, the Stockholm Environmental Institute (SEI) and Global Canopy (GC) launched the Trase Initiative, a direct response to the urgent need for a breakthrough in commodity and supply chain transparency. Trase is a public information system of open-access data that empowers companies, governments, and financial institutions with insights about actor-specific exposure to deforestation risk across entire commodity sectors and jurisdictions. Their 2020 vision is to cover 70 percent of the global trade of forest-risk commodities.
The platform, currently the only of its kind, is designed to be simple, straightforward, and comprehensive. To produce unique risk exposure assessments for entire sectors like that of Brazilian soy or Indonesian palm oil, Trase does the laborious work of acquiring, integrating, analyzing, synthesizing, visualizing, and drawing insights from disparate datasets. The key innovations are the use of customs, bills of lading, tax and logistics datasets, natural language programming, innovative modeling approaches, and the disclosure of data, analyses, and methods in an online platform. The approach produces insights on the exposure of commodity traders to deforestation activity at the sub-national scale, down to individual districts and municipalities, and connects specific production regions to global markets and trading companies. It also links importing countries to specific measures of embodied deforestation risk, raising the awareness of the issue, and supporting governmental policies and actions to reduce that risk.
Initially launched in South America, Trase is already integral to understanding the impacts of commodity trade globally. Trase has helped lead research for the Soy Buyers Coalition, a group of European consumer goods companies collaborating to identify collective risks and pinpoint on-the-ground initiatives that address soy-related deforestation in Brazil. The platform is informing the French government, helping them build their capacity to track progress against their National Strategy to Combat Imported Deforestation. Trase data are also being increasingly used by leading civil society organizations to improve the targeting of their campaigns.
Adding to its current offerings, Trase will launch its financial module in the summer of 2020. This exciting development will enable financial institutions to assess the sustainability of their portfolios, bringing unprecedented transparency to the hundreds of billions of dollars that directly and indirectly finance tropical deforestation. And for the companies that feel uncomfortable with the level of transparency Trase discloses, they have an opportunity to clarify, document and disclosure their actions to mitigate those risks.
Global Forest Watch Pro (GFW Pro)
After recognizing deforestation risk exposure (either through the Trase platform or by other means), commodity buyers and financial institutions may mitigate that risk by taking a more in-depth look at individual producers' and suppliers' compliance with their sustainability policies. This practice becomes essential if market actors are also interested in reducing other types of supply chain risk, such as illegality and social conflict. But doing that is not straightforward: it requires a detailed, farm and/or asset-level understanding of their supply chain. And while some commercial tools have been made available over the last decade to address that need, they have limited geographical and commodity scope, and a price tag that has acted as a cost barrier for medium and small companies.
In June 2019, the World Resources Institute (WRI) launched Global Forest Watch Pro (GFW Pro). GFW Pro is a geo-traceability tool that helps businesses, their clients, and financiers mitigate sustainability risks and report on progress on a timely basis, across any commodity and region in the world. It is built on WRI's flagship Global Forest Watch, a platform that uses the best available remote sensing technology and data analytics to shed light on global deforestation patterns and trends. GFW Pro works by allowing companies to securely upload the spatial location of every farm or production facility in their supply chain into the platform. The tool automatically overlaps that information with deforestation and other maps, carrying out analysis, and producing synthesis reports in user-friendly dashboards. The output is a description in an exceptional level of detail of the linkages of each supplier and investee (and the entire supplier or investee portfolio) with deforestation, fires, and infractions affecting national parks and indigenous lands. The tool enables market actors to monitor the performance of suppliers and investees (and their own), according to sustainability criteria such as those provided by the Accountability Framework. More importantly, companies and financial institutions can assess whether their supply chain and investee sustainability actions are resulting in behavioral change and sustainability impacts.
GFW Pro is rapidly increasing in popularity. It is currently in use by more than two hundred institutions from thirty countries, including multinationals like The Procter & Gamble Company, Mondelez, Louis Dreyfuss Company, Olam, Cargill, and Unilever. The sheer market influence of these first adopters in combination with the tool's free access will help WRI achieve its goal of "leaving no one behind." The path to scale includes the promotion of the tool through the supply chains of leading businesses so that GFW Pro is adopted by their suppliers, and by the suppliers of their suppliers, creating a cascading effect across multiple commodities and geographies.
Geospatial Technology Breakthroughs
The success of these tools has relied on technological innovations that boosted the ability of scientists and practitioners to capture farm-level and landscape-level insights on land use patterns and trends across continental and global scales. Advances in machine learning, cloud computing, and free access to satellite imagery have dramatically reduced the costs of spatial analyses. Initiatives from partners like the Global Land Analysis and Discovery Program at the University of Maryland, Google Earth Engine, and the Mapbiomas Initiative have been fundamental in producing much-needed spatial datasets that serve as a critical input into Trase, GFW Pro, and many other tools.
The Time for Action is Now
Now that the core transparency infrastructure is in place, there are no credible reasons left to justify inaction. The need for transparency is also expanding quickly, creating ideal conditions for a rapid pace of progress towards a more sustainable, resilient, and climate-friendly economy. Take, for example, the growing investor demand for non-financial climate disclosures through voluntary mechanisms like the Task Force on Climate-Related Disclosures. Or how trade agreements are being scrutinized – and even threatened – for the lack of sufficient safeguards that guarantee sustainable supplies. Transparency is becoming sine qua non in every transaction, investment, and trade deal. It is time for like-minded organizations to join forces, mainstream supply chain transparency, and address the long-standing challenge of deforestation at scale.